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- Property Sale Demand Index sees a drop of 14.8 per cent in Q4 2022, on the back of rising property prices
- Rental demand sees a slight drop by 4 per cent in Q4 2022 after consecutive upticks in previous quarters of the year
- Johor received the most interest among property sales listings, likely boosted by competitive prices.
Kuala Lumpur, Feb 17: PropertyGuru Malaysia announced that its PropertyGuru Malaysia’s Property Market Report (MPMR) Q1 2023, revealed that property prices continued to rise against the backdrop of lower demand from buyers, creating a widening gap between them and sellers.
The report captured upward trends in the Sale Price Index, with asking prices on PropertyGuru listings increasing by 1.5 per cent QoQ.
This likely comes on the back of the overnight policy rate rising to 2.75 per cent last year, contributing towards the higher overall cost of property ownership. In contrast, the Sale Demand Index saw a significant drop of 14.8 percent QoQ, reflecting how potential buyers may still be facing affordability issues or lack of confidence towards the current property prices on the market.
“While the property market has seen healthy activity throughout 2022, our recent reports have shown that Malaysians are now more careful when making big purchasing decisions,” Sheldon Fernandez, Country Manager, Malaysia (PropertyGuru.com.my and iProperty.com.my) said.
Rising inflation and higher borrowing costs have tightened potential buyers’ budgets, simultaneously forcing sellers to raise their prices to cover the higher cost of property investments. This has created a phenomenon where the price gap between both parties has widened, further contributing to the housing affordability issue we’ve been tracking throughout the past year.”
The Rise in Rental Prices Slows Down Demand
Following rising property prices, potential homebuyers gravitated towards the rental market, seeing that the Rental Demand Index reached 32.9 per cent in 2022. The supply of rental listings on PropertyGuru website also increased by 19.6 per cent, as landlords were jumping back into a rental market with positive demand, seeking alternative income sources to offset inflation.
The Hipster @ Taman Desa recorded the most views, among rental properties nationwide in Q4 2022. It is situated about 7km away from the city center.
Tenants continue to place heavy emphasis on accessibility and amenities when looking for shorter-term accommodations, prioritising locations closer to the city with competitive prices.
However, the Property Market Report registered an ease in rental demand by four per cent QoQ in Q4 2022 after consecutive increases in the previous quarters.
The slight downturn in rental appetite may be due to the higher rental prices in the market, edging up to 2.8 per cent QoQ at the end of last year.
Despite this, the rental market is expected to remain active as the government recently waived industry quotas to speed up the hiring of foreign workers, who will bring in fresh demand for rental properties in industrial areas of Malaysia.
Various Factors Contributing to Rising Prices
Following three consecutive quarters of continuous price increases, the asking prices of properties for sale in Malaysia continued its climb by 1.5 per cent in QoQ in Q4 2022.
For the whole of 2022, the asking prices listed on PropertyGuru.com.my went up by 5 per cent.
This upward trend can be expected to continue as existing homeowners increase housing prices to counter the higher overall cost in homeownership caused by the higher interest rate.
According to the Ministry of Finance, The Malaysian economy expanded by 8.7 per cent YoY in 2022, the highest annual growth recorded after 2000 (8.9 per cent YoY).
Moreover, the growth is paired with a downward unemployment rate trend, declining to 3.6 per cent in Q3 2022 from 4.2 per cent in Q1 2022.
These positive shifts in the local economy also ease the pressure on property players to sell, with most holding an optimistic view of the market in lieu of the appointment of the new government.
As prices continue to rise, interest in Johor’s real estate market is also on the upswing.
The Astaka @ 1 Bukit Senyum topped the condominium category with 8,784 views on the PropertyGuru website, while Leisure Farm took the top spot for landed properties.
This is likely due to the projects’ advantageous locations, which are strategically located with competitive property prices.
Towards the central region, Cheras and Bandar Tasik Selatan registered the highest increase in interest. Potential buyers set their sights towards the outer areas of Klang Valley due to larger and more affordable housing options with access to the Light Rail Transit or expressways.
This is consistent with the findings of Consumer Sentiment Study for H1 2022, where the increase in a remote working arrangement in industries contributed to the preference for property outside the city.
“As the Malaysian economy is expected to expand by four per cent to five per cent in 2023, the property market is likely to remain active with positive growth. Meanwhile, the drop in sale and rental demand seen at the end of 2022 may largely be contributed by year-end holidays and festivities putting a pause to Malaysia’s homeownership plans.
“However, property players should still place consideration of the current housing affordability issue and expect sales demand to slow down in the first half of the year. At the same time, many Malaysians are waiting patiently for government assistance in the upcoming re-tabling of Budget 2023 and an improvement in inflation before making their big purchase.”
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